Higher yields, taxes for farmers
- By Benjamin Lanka,
Revenues not rising as fast as costs
FORT WAYNE – Rising yields and crop prices mean more revenue for farmers, but they also mean higher taxes.
Farmers across Allen County will generally see a 16 percent jump in their property taxes this year thanks to changes in their property's taxable value, which is driven by the land's productivity.
While most homeowners should expect to see only marginal increases or decreases in their 2012 property tax bills, owners of farms can expect fairly large jumps.
"That puts a hurt on the farmers," said Roger Hadley, president of the Allen County Farm Bureau. "Our other production costs are going way up, too."
The reason for the increase in property tax bills is a steady climb in the taxable value of farmland, which is calculated by a state formula.
That formula considers land productivity, crop prices and farm expenses, according to Katrina Hall, tax and local government specialist with the Indiana Farm Bureau.
That base value has grown from $880 an acre for 2007 taxes to $1,290 last year and $1,500 an acre this year. The 16 percent jump in base land value this year means a 16 percent increase for property tax bills in much of Allen County because tax rates remained fairly flat. The land value has increased statewide, but its effect on tax bills will vary by area depending on changes in local tax rates.
"You come up with a value that has been increasing because commodity prices over the last two to three years have really escalated," Hall said.
The final value of a farmer's land includes the base value and other multipliers, such as soil type and whether the land is hilly or wooded.
Harold Kleine, who grows corn, beans and wheat in southern Allen County, said while revenues have increased for farmers, they haven't kept up with the rising cost of equipment or fuel.
"The bad part is our cost always goes up," said Kleine, who had to abandon raising cattle because it was costing him money.
One of Kleine's farm parcels rose in taxable value from $35,100 to $49,100 this year, upping his tax bill by $225.
Hadley, who farms corn, soybeans and wheat in the Woodburn area, said he is concerned the value of farmland is rising higher that what it can produce in income. He said the value seems to instead be based on its potential sales price.
Hadley said farmland is now being bought as a real estate rather than an agricultural investment. "It's getting to the point it's burdensome," he said of the taxes.
Hall said the state formula tries to account for the revenue generated by farmers and their expenses, but she acknowledged the data lag reality. This is a concern if farm incomes were to dip one year and farmers would be faced with higher taxes than their land could support.
Farmers should expect another increase next year when the base price per acre will rise to $1,630. Hall said it could have been even worse for farmers next year had the state changed its soil multiplier formula – increasing the possible taxable value for farmland.
The proposed multiplier change would have increased farm tax bills by 18.5 percent on top of the increase from the change in base rate. Hall said this would have meant an additional $57 million paid by farmers in property taxes next year.
Fortunately, Hall said, that change was delayed for a year for further study. She said she is still trying to determine the rationale behind it and whether it is appropriate.
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